WHY IS INFLATION HIGH IN TÜRKİYE?Türkiye has the highest inflation rate among European countries. In July 2025, annual inflation was 33.52 percent. The Ministry of Treasury and Finance is implementing a disinflation program to reduce high inflation.As it is known, in order to implement a disinflation program, the following three conditions must be met according to the IMF model.These are respectively;(a) Domestic wages and prices shall be fully flexible and shall not be predetermined or indexed.(b) Inflation expectations should be taken into account in wage increases, and the inflation rate of the previous period should not be reflected in wages.(c) The expectation of devaluation should disappear, so a floating exchange rate should be introduced. There should be complete confidence in the central bank, seigniorage pressure should disappear, expenditures and revenues of public finances should increase in proportion to the growth rate. There should be no expectation of any increase in the money supply.Meanwhile, in 2006, Türkiye switched to the inflation targeting regime, which began to become fashionable in the 1990s. In this regime, in addition to the conditions listed above, some technical details are sought.What are they? Let’s list it like this; making a new price index, Türkiye did it. And it created a new consumer price index based on 2003. As it is known, Türkiye had previously switched to a floating exchange rate regime.As for the other technical details… There should be no seigniorage pressure, and the interbank rate and inflation target should be consistent.As we know it, inflation is ultimately a monetary event. If the money supply increases well above the GDP growth rate, there will be inflation. This is a fact that has been known since ancient times.Now let’s take a look at the developments in my country… The average monthly GDP growth rate in the last 39 months was 4 per thousand. In contrast, the money supply (M2) increased by an average of 5 percent per month.Again, the increase in the reserve money, which shows the pure part of the seigniorage, increased from 579.6 billion liras to 4 trillion 525 billion liras in the last 39 months. In other words, about 4 trillion liras of pure seigniorage was made.In addition to all this, what is the target inflation range? According to the latest monetary statement, the range of 25-29 percent was determined. So, what was the target inflation rate in the 2025 Program? Let’s remember that it was at the level of 17.5 percent.So, in order to stop inflation, we first need to make seigniorage and the money supply consistent with the GDP growth rate. Therefore, it is useful to target the money supply instead of the inflation targeting regime. While targeting the money supply has the problem of velocity, it is clear that it would be much more useful than the current practice.